Mortgage holders should expect interest rates to stay higher for longer, as the RBA warns that competition for global capital from AI and data centre companies is pushing up the neutral interest rate. The cash rate of 4.6% is the highest in 15 years, and markets still almost fully price in another hike by mid-2027, even though expectations for a November increase have eased. Markets do not anticipate rates falling below current levels until at least mid-2028. Commonwealth Bank's Luke Yeaman argues that heavy government and AI spending makes rates less effective, with federal spending reaching 26.9% of GDP in 2025/26, the highest in 40 years excluding COVID-19. HSBC's Paul Bloxham has called for further spending cuts in the mid-year fiscal update expected in December.
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Related tickers and likely impact
DXY
▲ Likely positiveRelevance: low
| Market | Currencies |
|---|---|
| Close on 10/16/2026 | 101.78 |
| Change that session | -0.20% |
XAU/USD
▼ Likely negativeRelevance: low
| Market | Gold |
|---|---|
| Close on 10/16/2026 | 4,165.63 |
| Change that session | -0.13% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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